Contracts/Non est factum: Difference between revisions
From wikilawschool.net. Wiki Law School does not provide legal advice. For educational purposes only.
en>Yobot m (WP:CHECKWIKI error fixes, removed stub tag using AWB (12061)) |
Lost Student (talk | contribs) m (Text replacement - "{{:Contracts/TOC}}" to "{{:Contracts/TOC}}{{Breadcrumb|parent_page=Contracts|alias={{SUBPAGENAME}}}}") |
||
| (13 intermediate revisions by 9 users not shown) | |||
| Line 1: | Line 1: | ||
{{ | {{DISPLAYTITLE:Contracts/''Non est factum''}}{{:Contracts/TOC}}{{Breadcrumb|parent_page=Contracts|alias={{SUBPAGENAME}}}} | ||
{{ | '''''Non est factum''''' ([[Latin]] for "it is not [my] deed") is a defence in [[contract law]] that allows a signing party to escape performance of an agreement "which is fundamentally different from what he or she intended to execute or sign."<ref name="Chew 2009"/> A claim of ''non est factum'' means that the signature on the contract was signed by mistake, without knowledge of its meaning. A successful plea would make the contract void ''[[ab initio]]''.<ref name="Petelin v Cullen"/> | ||
'''''Non est factum''''' ([[Latin]] for "it is not [my] deed") is a defence in [[contract law]] that allows a signing party to escape performance of an agreement "which is fundamentally different from what he or she intended to execute or sign."<ref | |||
According to ''Saunders v Anglia Building Society'' [1971],<ref>AC 1004.</ref> applied in ''Petelin v Cullen'' [1975],<ref | According to ''Saunders v Anglia Building Society'' [1971],<ref>{{cite BAILII |litigants=Saunders v Anglia Building Society |year=1970 |court=UKHL |num=5 |parallelcite=[1971] [[Appeal Cases Law Reports|AC]] 1004 |courtname=auto}}.</ref> applied in ''Petelin v Cullen'' [1975],<ref name="Petelin v Cullen"/> the strict requirements necessary for a successful plea are generally that: | ||
# The person pleading ''non est factum'' must belong to "class of persons, who through no fault of their own, are unable to have any understanding of the purpose of the particular document because of blindness, illiteracy or some other disability."<ref>Chew | # The person pleading ''non est factum'' must belong to "class of persons, who through no fault of their own, are unable to have any understanding of the purpose of the particular document because of blindness, illiteracy or some other disability."<ref name="Chew 2009">{{cite web |last=Chew |first=C.Y.C. |url=http://www.austlii.edu.au/au/journals/UWSLawRw/2009/4.pdf |title=The Application of the Defence of Non Est Factum: An Exploration of its Limits and Boundaries}} (2009) 13(1) University of Western Sydney Law Review 83.</ref> The disability must be one requiring the reliance on others for advice as to what they are signing.<ref name="Chew 2009"/><ref name="Petelin v Cullen"/> | ||
# The "signatory must | # The "signatory must have made a fundamental mistake as to the nature of the contents of the document being signed," including its practical effects.<ref name="Chew 2009"/> | ||
# The document must have been radically different from one intended to be signed.<ref | # The document must have been radically different from one intended to be signed.<ref name="Chew 2009"/> | ||
''Non est factum'' is difficult to claim as it does not allow for negligence on the part of the signatory, i.e. failure to read a contract before signing it, or carelessness,<ref | ''Non est factum'' is difficult to claim as it does not allow for negligence on the part of the signatory, i.e. failure to read a contract before signing it, or carelessness,<ref name="Petelin v Cullen"/>{{rp|para 12}} will not allow for ''non est factum''. Furthermore, the Court has noted that there is a heavy onus that must be discharged to establish this defence as it as an "exceptional defence."<ref name="Chew 2009"/>{{r|Petelin v Cullen|pp=359-60}} | ||
== Notable | == Notable examples == | ||
In ''Petelin v Cullen'' (1975),[ | In ''Petelin v Cullen'' (1975),<ref name="Petelin v Cullen">{{cite AustLII|HCA|24|1975|litigants=Petelin v Cullen |parallelcite=(1975) 132 [[Commonwealth Law Reports|CLR]] 355|courtname=auto}}.</ref> the defendant, Petelin, was illiterate and could speak very little English, but still signed a document he believed to be a receipt for $50 but which actually gave Cullen the option to purchase Petelin's land, which he exercised. Petelin refused to sign the contract for sale, alleging he had been deceived, and Cullen sought [[specific performance]]. The court found that because of Petelin's mistaken belief which was not because of his carelessness, his claim of ''non est factum'' was successful. The court noted that even if he had been careless, "Cullen was not an 'innocent person without knowledge or reason to doubt the validity of the appellant's signature'".<ref name="Petelin v Cullen"/>{{rp|para 15}} <ref>{{Cite web|url=http://www.australiancontractlaw.com/cases/petelin.html|title=Petelin v Cullen|last=Clarke|first=Julie|website=Australian Contract Law |archive-url=https://web.archive.org/web/20170814234137/http://www.australiancontractlaw.com/cases/petelin.html |archive-date=14 August 2017}}</ref> | ||
In ''Lloyds Bank v Waterhouse'' | In ''Lloyds Bank v Waterhouse''<ref>''Lloyds Bank v Waterhouse'' [1993] 2 FLR 97.</ref> a father acted as a guarantor to his son's debt when purchasing a farm. The father was illiterate and signed the bank document under the belief that he was acting as the guarantor for the farm only, when the contract was actually for all the debt accumulated by the son. As he was illiterate, this was a mistake as to the document signed and the father was successful in claiming ''non est factum''. | ||
Another notable case on ''non est factum'' is ''Foster v Mackinnon'' (1869) LR 4 CP 704 where an elderly man signed a [[bill of exchange]] but was only shown the back of it. | Another notable case on ''non est factum'' is ''Foster v Mackinnon'',<ref>''Foster v Mackinnon'' (1869) LR 4 CP 704.</ref> where an elderly man signed a [[bill of exchange]] but was only shown the back of it. He was granted a new trial.<ref>{{Cite web|last=Davies|first=W.E.D.|title=Negligence and Non Est Factum: Carlisle and Cumberland Banking Company v Bragg Re-Examined|url=http://www.austlii.edu.au/au/journals/UWALawRw/1965/7.html}} (1965) 7(2) University of Western Australia Law Review 191.</ref> | ||
Illustratively, in '' | Illustratively, in ''Ford v Perpetual Trustees Victoria Ltd'',<ref name="Ford v Perpetual">{{cite AustLII|NSWCA|186|2009|litigants=Ford v Perpetual Trustees Victoria Ltd |parallelcite=(2009) 257 [[Australian Law Reports|ALR]] 658 |courtname=auto}}.</ref><ref name="Bant 2009">{{Cite web|last=Bant|first=Elise|title=Incapacity, Non Est Factum and Unjust Enrichment |url=http://www.austlii.edu.au/au/journals/MelbULawRw/2009/14.html}} (2009) 33(2) Melbourne University Law Review 368.</ref> the son of Mr Ford (Appellant) had arranged a loan from a bank to arrange for the purchase of a cleaning business, by using his father's residential property as security. When he defaulted, the bank sought to enforce its rights under the loan and mortgage agreements. | ||
Because Mr Ford was illiterate (though capable of signing his name), suffered from a "significant congenital intellectual impairment" and had no understanding of the particulars of the agreement or consequences of non-payment, the judge at appeal found that he had been the pawn of his son throughout, and "his mind was a mere channel through which the will of his son operated."<ref | Because Mr Ford was illiterate (though capable of signing his name), suffered from a "significant congenital intellectual impairment" and had no understanding of the particulars of the agreement or consequences of non-payment, the judge at appeal found that he had been the pawn of his son throughout, and "his mind was a mere channel through which the will of his son operated."<ref name="Bant 2009"/> | ||
The Court dismissed the argument that the appellant had been careless as that would presume that he was capable of turning his mind to the issue and making judgements.<ref | The Court dismissed the argument that the appellant had been careless as that would presume that he was capable of turning his mind to the issue and making judgements.<ref name="Bant 2009"/> It ruled that Mr Ford lacked the legal capacity, and therefore contract was void for '''non est factum'''. While not a binding judgement, this example illustrates an application of ''Petelin v Cullen'' [1975] as it depicts the necessary level of incapacity and level of misunderstanding required to shift the heavy burden of the party raising the defence. | ||
==References== | ==References== | ||
Latest revision as of 21:37, September 26, 2023
Non est factum (Latin for "it is not [my] deed") is a defence in contract law that allows a signing party to escape performance of an agreement "which is fundamentally different from what he or she intended to execute or sign."[1] A claim of non est factum means that the signature on the contract was signed by mistake, without knowledge of its meaning. A successful plea would make the contract void ab initio.[2]
According to Saunders v Anglia Building Society [1971],[3] applied in Petelin v Cullen [1975],[2] the strict requirements necessary for a successful plea are generally that:
- The person pleading non est factum must belong to "class of persons, who through no fault of their own, are unable to have any understanding of the purpose of the particular document because of blindness, illiteracy or some other disability."[1] The disability must be one requiring the reliance on others for advice as to what they are signing.[1][2]
- The "signatory must have made a fundamental mistake as to the nature of the contents of the document being signed," including its practical effects.[1]
- The document must have been radically different from one intended to be signed.[1]
Non est factum is difficult to claim as it does not allow for negligence on the part of the signatory, i.e. failure to read a contract before signing it, or carelessness,[2]Template:Rp will not allow for non est factum. Furthermore, the Court has noted that there is a heavy onus that must be discharged to establish this defence as it as an "exceptional defence."[1]Template:R
Notable examples[edit | edit source]
In Petelin v Cullen (1975),[2] the defendant, Petelin, was illiterate and could speak very little English, but still signed a document he believed to be a receipt for $50 but which actually gave Cullen the option to purchase Petelin's land, which he exercised. Petelin refused to sign the contract for sale, alleging he had been deceived, and Cullen sought specific performance. The court found that because of Petelin's mistaken belief which was not because of his carelessness, his claim of non est factum was successful. The court noted that even if he had been careless, "Cullen was not an 'innocent person without knowledge or reason to doubt the validity of the appellant's signature'".[2]Template:Rp [4]
In Lloyds Bank v Waterhouse[5] a father acted as a guarantor to his son's debt when purchasing a farm. The father was illiterate and signed the bank document under the belief that he was acting as the guarantor for the farm only, when the contract was actually for all the debt accumulated by the son. As he was illiterate, this was a mistake as to the document signed and the father was successful in claiming non est factum.
Another notable case on non est factum is Foster v Mackinnon,[6] where an elderly man signed a bill of exchange but was only shown the back of it. He was granted a new trial.[7]
Illustratively, in Ford v Perpetual Trustees Victoria Ltd,[8][9] the son of Mr Ford (Appellant) had arranged a loan from a bank to arrange for the purchase of a cleaning business, by using his father's residential property as security. When he defaulted, the bank sought to enforce its rights under the loan and mortgage agreements.
Because Mr Ford was illiterate (though capable of signing his name), suffered from a "significant congenital intellectual impairment" and had no understanding of the particulars of the agreement or consequences of non-payment, the judge at appeal found that he had been the pawn of his son throughout, and "his mind was a mere channel through which the will of his son operated."[9]
The Court dismissed the argument that the appellant had been careless as that would presume that he was capable of turning his mind to the issue and making judgements.[9] It ruled that Mr Ford lacked the legal capacity, and therefore contract was void for non est factum. While not a binding judgement, this example illustrates an application of Petelin v Cullen [1975] as it depicts the necessary level of incapacity and level of misunderstanding required to shift the heavy burden of the party raising the defence.
References[edit | edit source]
- ↑ 1.0 1.1 1.2 1.3 1.4 1.5 Chew, C.Y.C. The Application of the Defence of Non Est Factum: An Exploration of its Limits and Boundaries, (2009) 13(1) University of Western Sydney Law Review 83.
- ↑ 2.0 2.1 2.2 2.3 2.4 2.5 Template:Cite AustLII.
- ↑ Template:Cite BAILII.
- ↑ Clarke, Julie Petelin v Cullen,
- ↑ Lloyds Bank v Waterhouse [1993] 2 FLR 97.
- ↑ Foster v Mackinnon (1869) LR 4 CP 704.
- ↑ Davies, W.E.D. Negligence and Non Est Factum: Carlisle and Cumberland Banking Company v Bragg Re-Examined, (1965) 7(2) University of Western Australia Law Review 191.
- ↑ Template:Cite AustLII.
- ↑ 9.0 9.1 9.2 Bant, Elise Incapacity, Non Est Factum and Unjust Enrichment, (2009) 33(2) Melbourne University Law Review 368.
